February 6, 2013

Having Begged For It, A Modern Makeover And Doubling In Price

2975%20Lake%20Street%20Before.jpg

Purchased for $3,060,000 in October 2011 as a 3,654 square foot, four-bedroom home with decent bones and "begging for a high-end makeover" (and paint job), two weeks later plans to convert the basement of 2975 Lake Street into habitable space, remodel the interior and add a roof deck above were filed for the Sea Cliff home.

2975%20Lake%20Street%20After.jpg

Having since been madeover, 2975 Lake Street has just returned to the market listed for $7,998,000 as a six-bedroom home with six and one-half baths, new rooms and a wine cellar on the lower level, and a roof top terrace above:

2975%20Lake%20Floor%20Plan%20New.jpg

While listed without any square footage, it has been estimated at 6,480 square feet, 2,040 of which is below-grade with 4,440 newly remodeled square feet above.

2975%20Lake%20Street%20Kitchen.jpg

UPDATE: Following our post, the listing for 2975 Lake Street was quickly updated with a hastily taken photo of the property's façade and new new landscaping:

2975%20Lake%20Street%20After%20The%20After.jpg

∙ Listing: 2975 Lake Street (6/6.5) - $7,998,000 [2975lake.com]

First Published: February 6, 2013 9:00 AM

Comments from "Plugged In" Readers

There is no excuse for that landscaping. San Francisco has a very poor vocabulary of residential landscapes compared to similar high end neighborhoods in Southern California, why is that? I hope the new owners show more imagination than what has currently been created.

Posted by: Curious at February 6, 2013 9:15 AM

What's the obsession with stripping original molding off the exterior? And here they've one-upped that by stripping some, but not all. Looks confused.

Posted by: R at February 6, 2013 9:33 AM

I never knew I had a "gallery" in my humble abode, I always thought it was just a hallway...

Posted by: nonaon at February 6, 2013 9:41 AM

Looks good. Few things I would have done different. Like taking a pic of the bridge on a sunny day top side.

Posted by: eddy at February 6, 2013 9:56 AM

guys, i live up the street from this house and can attest to its condition at the sale. An alcoholic (blue sky vodka bottles lined the windows) hoarder lived here for 30+ years and its hard to describe what the interior looked like. After they removed the 2 tons of trash, the house interior was destroyed beyond recognition. It was a shame because walking around the empty house (there was an 'estate' sale for all the nicknacks she collected (in multiples)) it was a time capsule and attested to the amazing architecture of the 1930s when the house was built.

Posted by: momonthego at February 6, 2013 9:57 AM

San Francisco has absolutely ceased to be worth the money.

Posted by: Jim T at February 6, 2013 10:05 AM

Seems pretty reasonable to me, Huge house, asking less than $1,000 per square foot for super luxury in the one of the best neighborhoods. Fantastic views. The complaints are fairly piddly compared to other places we've seen here.

I can't come anywhere near affording this place, but if I could, I would be interested.

Posted by: lyqwyd at February 6, 2013 10:10 AM

Not all of the new square footage is below grade as you can clearly see the front room there has pretty decent windows and light.

Posted by: eddy at February 6, 2013 10:22 AM

So now that the Super Bowl is over, will all the new inventory be a 30% markup over 2012 prices?

It's not just this house, but many seem to be coming to market with very aggressive prices. Yes, inventory is low, but will buyers step forward?

How much have prices really increased over the last year for $2 million + houses?

Posted by: DataDude at February 6, 2013 10:36 AM

The inside looks great, the outside looks boring...and that landscaping is horrible....the outside looked much better before, even in that horrible color.

Posted by: Brian at February 6, 2013 12:31 PM

Great house, great location, good price. Even mid- to high 6's the developers do well, right? The exterior photo doesn't do justice to how much additional elevation the houses on this side of this block of Lake have over the ones across the street. Check streetview.

Posted by: soccermom at February 6, 2013 3:33 PM

"asking less than $1,000 per square foot"

List price is $1,234 per square foot.

"Even mid- to high 6's the developers do well, right?"

Yes. Doubt the renovation cost more than $1m. It's ok, not great.

Posted by: Michael at February 6, 2013 3:45 PM

Lived there for 30+ years...can only imagine what she originally paid for it.

The kitchen seems well appointed to me. Nothing over the top.

The only word that comes to mind with the landscaping is pathetic. When you're investing a ton of money in a project (and asking for a ton in return) bring in a professional to make over the front.

@soccermom: Nearly $5m over the $3m purchase price is a "good price" to you? I think you've been hit in the head too many times with the ball to see that this is pure greed...with a crappy front yard to boot.

Posted by: Mark at February 6, 2013 5:06 PM

@curious. In fact, there are photos of two different landscaping designs. On the listing page, it shows a sloping lawn. On the SS page, it shows mulch with scattered plantings. Which do you prefer - or, perhaps, dislike less?

Posted by: jlasf at February 6, 2013 6:02 PM

It looks like they took out the bark and replaced it with sod according to the latest listing pix.

Posted by: Chris McMahon at February 6, 2013 6:04 PM

Another 30% increase....just cuz the superbowl is over? Cannot wait until the bubble pops! RE agents are sprinting ahead to that point. They cannot get there fast enough. Have they learned nothing? 30% annual increases are completely unsustainable.

Posted by: Chris McMahon at February 6, 2013 6:07 PM

This house is for billionaires who love fog and cold weather. There are a lot of them in China who can't wait to buy their way to green cards.
Perfect timing. It is Chinese New Year!

Posted by: Smart American buyer at February 6, 2013 6:50 PM

The quality of the staging is horrible for this price level.

Posted by: wc1 at February 6, 2013 11:36 PM

that's hilarious -- it appears the listing agent (or an underling) photoshopped green sod in the front yard. btw, the yard (with the bark and bushes) is actually a good fix for the 90 degree slope. I always thought it ridiculous to put grass there because its literally impossible to trim. Ends up being ugly crab grass.

Posted by: momonthego at February 7, 2013 7:46 AM

No worries about the subprime staging since that's what is for sale here. Unstaged would be even better.

Posted by: The Milkshake of Despair at February 7, 2013 8:56 AM

My sense of the pricing here is:

$3.1mm purchase
$1.0mm luxury mkt appreciation Feb 11 to Feb 13
$1.55mm rehab expense (6,200sf * $250psf)
------------
$5.65mm all in value to date
20% Return on capital
$6.78mm closer to fair value

I think $250 per foot of rehab is conservative for this grade of finish.

I think if this house sold as a 'crazy-old lady fixer' today, 4.1mm is a fair estimate of value.

Despite the address, this house feels/is proper Sea Cliff, not Lake District. Six bedrooms and roof terrace, without the paranoia and constant maintenance of living on the cliff of Sea Cliff. Good trade.

I may be biased upward - I like the neighborhood.

Posted by: soccermom at February 7, 2013 9:18 AM

I cannot believe they chopped that picture. Quite a few pics were changed out yesterday.

Posted by: eddy at February 7, 2013 10:35 AM

soccermom nailed. agree that $250 psf for rehab is conservative considering the house was ready to fall down.

Posted by: momonthego at February 7, 2013 10:37 AM

"...without the paranoia and constant maintenance of living on the cliff..."

Is this particular cliff unstable ? I was not aware of that. Could be a big deal of half your back yard falls into the sea.

As for the cost and return calculation, I do not understand why you compute 20% return on capital for appreciation (which is not capital).

Posted by: The Milkshake of Despair at February 7, 2013 12:13 PM

Building department records shows that the seller spent $600K on renovation. Granted, the sellers have cheated the city on permit fees. With the low-end finishing of the interior, any experienced contractor can do the renovation for less than $1M.

Posted by: Smart American buyer at February 7, 2013 12:15 PM

@TMOD: Yes, return on market appreciation is a little suspect as a concept, but I am simplifying here. Note I did not include include any compounding and I misstated the purchase date to Feb. not Oct. 11. 20% over 1.5 years, etc.

@Smart American buyer. $1mm over 6,200sf (I'm rounding down from the stated/estimated footage in the ad) is $161 per foot. Please let me know what contractor can produce this level of finish at that price point. New windows, stucco, roof, roof deck, kitchen, bathrooms, floors, millwork, lighting plan, plumbing. I am shopping for a good one.

Cheers

Posted by: soccermom at February 7, 2013 12:36 PM

Smart American,

The builder has to build all the non counted feet as well. Roof decks and copper garage doors do build themselves.

Posted by: sparky*b at February 7, 2013 2:15 PM

UPDATE: A Quick Retake Out On Lake Street. And no, the new photo wasn't Photoshopped.

Posted by: SocketSite at February 7, 2013 2:56 PM

Perhaps the listing agent can huddle with the good folks from 2523 Steiner to brainstorm optimal curb appeal...

http://www.socketsite.com/archives/2011/04/oh_no_theyre_not_oh_yes_they_are.html

Posted by: Joshua at February 7, 2013 4:10 PM

Is this the new business model for flippers?
Take a moderate house, make it much bigger, one way or the other. Here they turned the basement into living space.
Take out all the detail so that the interior could be anywhere.
Charge $8 million.

In the case of a house originally designed to be a large, is there a premium for its architectural integrity (everything else being equal)?

What about "real SF" old interiors? Is there a difference in price?

Or is everything based on square feet now?

Posted by: conifer at February 7, 2013 4:17 PM

@conifer, I get your point in general but this home was dated as are many of these homes. The original pics were nothing spectacular and its hard to argue that this is not a vastly improved home in pretty much every single aspect. Is there "value" is preserving some of the architectural ginger / integrity. Maybe in a grand old home designed with specific and unique craftsmanship and details. But this home had maybe 3 or 4 interesting aspects that were seemed to have been lost. And these were mostly in the way for slightly interesting ceiling details that don't really fit the tone of this new home and certainly wouldn't have been anything that change the strategy of this flip. But this home is now good for the next 85 years with new everything. At least they kept, if painted, the front doors. And the pink bathroom (see image #16 in name link) was nothing to salvage. :)

Apologies for prematurely calling the revised imaged chopped. And good luck with the sale. I actually think this will go quick. Maybe Jack D will buy it while he works on his ElCD home.

Posted by: eddy at February 7, 2013 6:27 PM

I confessed. I flip houses for a living. I have renovated and sold 6 houses in the past 6 years.
The most expensive parts of the house are kitchen and bathrooms. Other square-footage such as bedrooms, family room are cheap. Ask the contractor VASILI METELITSA of BEAUTY HOME CONSTRUCTION in San Mateo who renovated the house. He'll laugh at all soccer moms who think that the renovation of 2975 lake costs more than $1M. Still, some billionaires from China will pay $5M for the house.

Posted by: Smart American buyer at February 8, 2013 4:18 PM

@Smart American

Great, thanks for the reference. I will have to call Vasili.

Was 132 25th Avenue one of your flips? That was a Beauty Home Construction project. Bought for 1mm in Dec '10 and sold for 2.72 a year later. Someone made a bundle.

What were construction costs?

Posted by: soccermom at February 9, 2013 5:50 PM

Act Cont-Show (02/10/13) DOM: 5

Posted by: formerly%whatever at February 10, 2013 10:55 PM

Seriously impressive. Congrats to all; assuming it closes.

Posted by: eddy at February 11, 2013 6:10 AM

saw this at the open house. serious question -- why would someone put thermador appliances in an $8M house vs wolf, sub-zero, bosch, dacor etc. Is thermador now considered high-end or is the flipper just cutting costs?

Posted by: momonthego at February 11, 2013 8:48 AM

Great work. Seems like the 0.1% is hanging in there...

@momonthego I think if you price Thermador vs. those other brands, you will not find a discount. A high end price certainly (I have no idea about quality vs. others..)

Posted by: soccermom at February 11, 2013 11:13 AM

Often, at this end of the market, the buyers will immediately tear out the contractor's kitchen and put in one of their own design... So investing in high-end appliances may or may not pay off.

Posted by: Denis at February 11, 2013 11:43 AM

Forgive my ignorance, but I thought the contractor for this project was FIDES CONSTRUCTION in Millbrae as opposed to VASILI METELITSA of BEAUTY HOME CONSTRUCTION in San Mateo?

Posted by: Erich at February 12, 2013 9:02 AM

Sold at asking.

Posted by: eddy at February 28, 2013 5:12 PM

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